Personal Inspection Demystified
“Personal inspection” might mean many things to the ordinary “man on the street.” But to an appraiser, users of appraisal services, and regulatory agencies in the valuation space, “personal inspection” takes on a very specific meaning. In fact, beginning January 1, 2024, the meaning of “personal inspection” in appraisal practice changed. According to the 2024 Uniform Standards of Professional Appraisal Practice (USPAP), “personal inspection” means, in part:
PERSONAL INSPECTION: (for an appraisal assignment) the appraiser’s in-person observation of the subject property performed as part of the scope of work…
Before we examine how this definition impacts the appraisal process and the appraisal report, let’s break down this definition by examining a few key words:
appraiser
Calling an inspection a “personal inspection” means it was performed by the appraiser. We know, for example, that a foundation engineer’s examination of a property’s foundation would not be termed a “personal inspection” in an appraisal context.
in-person
The appraiser must physically visit the property. In class, I usually use the mantra “at, on, or in” to convey this concept to students. The appraiser must be “at” (e.g., at the sidewalk along the property), “on” (e.g., walking on the site), or “in” (e.g., exploring the inside of buildings). We know, for example, that an appraiser operating a drone while at his or her office could not claim to have performed a “personal inspection” of a property.
subject property
The defined term only relates to the property that is the subject of the appraisal. We know, for example, that the definition does not relate to observing other properties that are not the subject property.
part of the scope of work
The Appraisal Standards Board of The Appraisal Foundation has explained that the addition of this phrase to the definition means that a “personal inspection” relates to one particular assignment, because the scope of work is determined on an assignment-by-assignment basis. Therefore, an appraiser could not claim that an inspection performed a month ago by the appraiser is a “personal inspection” of the subject property for an assignment accepted today.
Now that we have a foundational understanding of some nuances to the definition, let’s look at the impact on appraisals and appraisal reports.
Considering that USPAP does not require an inspection of the subject property (although one is often performed, such as due to client scope requirements), we have to ask: Where is the term “personal inspection” even used in USPAP?
The term “personal inspection” is only used in the certification standards of USPAP – essentially, one place. For example, Standards Rule 2-3 indicates all real property appraisal reports must address the following certification element (there are corresponding certification requirements in Standards Rules 4-3, 6-3, and 8-3):
I have (or have not) made a personal inspection of the property that is the subject of this report.
In order for the appraiser to sign the certification (which must be part of the appraisal report), the statement within the certification must truthfully reflect the appraiser’s actions regarding the term “personal inspection.”
Some pre-printed forms use other terms or phrases that are not identical to “personal inspection” so it is critical for an appraiser to make clear what was and was not performed and whether it was performed as part of the particular assignment (or not). See one example below; actual certifications will vary depending on actions performed, forms used, and other factors.
Example Scenario:
- The appraiser physically inspected the subject property on March 1 for appraisal assignment A for Client A.
- The appraiser has now accepted a new appraisal assignment B on March 10 for Client B.
- Client B does not require a new visit to the property and the appraiser does not perform a new visit to the property for assignment B.
Can the appraiser claim in the appraisal report for Client B that she made a “personal inspection”?
In this case, the appraiser did not perform an in-person observation of the subject property as part of assignment B. Given that the physical visit to the subject property occurred prior to even accepting the assignment for Client B and the appraiser did not re-visit the subject property as part of assignment B, it would be impossible to claim a “personal inspection” in Client B’s appraisal report.
While the appraiser cannot claim a “personal inspection” for assignment B, she can use her certification (and other areas of the appraisal report) to clearly explain what she did not do, what she did do, and when she did it. In other words, the appraiser could include a certification in appraisal report B like:
I have not made a personal inspection of the subject property as part of this assignment’s scope of work. However, I physically visited the subject property on March 1, at which time I performed the complete visual inspection of the interior and exterior areas of the subject property that I referenced elsewhere in this appraisal report.
The client for this current assignment indicated that the March 1 effective date and the condition and characteristics of the property on that date are to be used for this appraisal and are acceptable for the intended use of this appraisal report.
For more information, see The Appraisal Foundation’s Q&As from March 6, 2024.
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